HARVELA INVESTMENTS v ROYAL TRUST

General principle:

Referential bidding by tender should be discouraged by the courts.

Name:

Harvela Investments Ltd v Royal Trust Co of Canada [1986] AC 207

Facts:

Two parties were invited to bid secretly for a block of shares, on the understanding that the shares would be sold to whoever bid highest. Harvela’s (complainant) bid $2 175 000, while the other party (Royal Trust of Canada: defendant) bid "$2 100 000, or $10 000 more than any other cash bid, whichever is higher".

Ratio:

The House of Lords in Harvela Investments v Royal Trust said the referential bid was ineffective and that Harvela’s cash bid should have been accepted.

Application:

If someone who makes a tender says that they will accept the highest offer to buy goods or the lowest for someone to provide certain items, or their services, the tender can be seen as something that is either an offer or an invitation to place offer. Placing a tender that references someone else’s’ bid will invalidate the tender.

Analysis:

Identify the unilateral offer made in Harvela Investments v Royal Trust of Canada. Has a similar unilateral offer been made in our case? If yes, which party accepted the unilateral offer?